Social Security is a program that is often talked about but not always well understood. Many people know it’s there to help provide financial support during retirement, but the benefits go much further!
Whether you’re planning for the future, caring for family members, or facing unexpected life changes, Social Security can help you and your loved ones financially secure.
This guide explores how Social Security benefits can impact your life, from retirement income to disability support and survivor benefits.
Let’s dive into how this program can benefit your financial journey and why it’s worth learning about now.
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What Are Social Security Benefits?
Social Security benefits provide income for retired people. The Social Security Act, signed by President Franklin Roosevelt in 1935, created these benefits. They are also a safety net for disabled workers and families after a death.
Benefits increase with inflation and are guaranteed. For many retirees, this may be the only steady income they get. Social Security is not based on need but encourages savings and private pensions.
5 Types of Social Security Benefits
Social Security offers several types of benefits. These help retired people, disabled workers, and their families. Keep reading to learn more about each type.
1. Retirement Benefits
Retirement benefits support people when they stop working. You can start receiving them as early as 62 or wait until you reach full retirement age, which is now 67. The average retirement benefit in February 2024 was $1,862 per month.
That totals up to about $22,344 each year.
Older adults make up around 80% of all beneficiaries. If you are a low earner retiring at age 65 in 2024, you’ll get about $15,477 annually. A high earner gets more—close to $33,769 yearly by retiring at the same age.
Almost all older adults (97%) will receive these benefits from the Social Security Administration (SSA).
2. Disability Insurance
Disability Insurance helps you if you cannot work due to severe disability. This benefit is called Social Security Disability Insurance (SSDI). In 2023, 90% of people aged 21-64 working in jobs covered by Social Security could get this help for a severe disability.
Racial gaps make Black workers more likely to have disabilities. SSDI provides essential support for those who need it most. Around 20% of all beneficiaries get SSDI or receive survivor benefits after losing a parent or spouse.
3. Spousal Benefits
Spousal benefits can start at age 62. They are smaller if claimed early. The most you can get is 50% of your spouse’s benefit.
Many women earn less and take more breaks from work, so they have lower savings and pensions. Over half of the people getting these benefits in their 60s are women, and this number rises to 70% by their 90s.
4. Survivor Benefits
Survivor benefits help families after a loved one dies. You can claim these benefits at age 60. Widows may get up to 100% of the deceased’s primary insurance amount (PIA). This adds valuable support during tough times.
Imagine a young worker in 2023. Supporting a spouse and two kids, they have life insurance worth nearly $948,000 through Social Security. These benefits lifted 1.4 million children above the poverty line in 2022…
5. Children’s Benefits
Children can also receive Social Security benefits. In 2022, more than 5.7 million children under 18 lived in families that received these payments. Over 2.6 million children received benefits as dependents of retired workers or had passed away.
These benefits help many children stay out of poverty. In fact, Social Security lifted about 1.4 million children above the poverty line that year. This support helps with living expenses and medical care costs for low-income families, making life easier.
How to Apply for Social Security
Start by gathering your essential documents. You need your Social Security number, birth certificate, and tax records. You can apply online at the SSA website or visit a local SSA office.
If you prefer to do it online, first create an account on My Social Security. Then, follow the steps and fill in all the needed information. The application will ask about your work history and family details.
If you have questions, call the SSA for help… they are there to assist!
Common Questions About Social Security
How does Social Security work?
Social Security helps people when they retire, become disabled, or pass away. It is funded by payroll taxes paid by both workers and employers. You also pay into it while you work through FICA or SECA taxes.
The money goes into trust funds invested in Treasury securities, which earn interest to keep the program running. The system aims to provide financial support throughout life, from retirement benefits to aid for surviving family members.
Without action, these trust funds might run out by 2035 but will still pay about 83% of promised benefits.
At what age can you start earning income on Social Security?
You can start getting Social Security benefits at 62. But you’ll get more monthly money if you wait until your full retirement age (66 or 67, depending on when you were born).
You can also start claiming benefits at 62 if you’re a spouse. Survivor benefits kick in as early as age 60. These help if your husband or wife has passed away. Keep these ages in mind to make the best choice for your situation!
How much Social Security will I get?
Social Security payments depend on your work and earnings. The average retirement benefit in February 2024 was $1,862 monthly or $22,344 yearly. If you retire as a high earner, you could get about $33,769 per year.
Low earners might receive around $15,477 annually.
The maximum monthly payment for retired workers is set to be $3,822 in 2024. This will rise to $4,018 in 2025. Social Security looks at your highest-earning years to decide how much you get.
Cost-of-living adjustments also affect the amount you receive yearly due to inflation rates and other factors, such as social security payroll taxes.
How is Social Security calculated?
Your Social Security benefits are based on your average indexed monthly earnings (AIME). They look at your highest 35 years of earnings. If you worked fewer than 35 years, zeros fill in the gaps.
They calculate your primary insurance amount (PIA) using a formula including “bend points,” which change yearly. For example, in 2023, the first bend point is $1,115, and the second is $6,721.
Your PIA decides how much you get each month. Adjustments for inflation keep up with increases marked by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
This process ensures fair payments no matter when you retire or become disabled.
The Bottom Line
Social Security offers many benefits. It provides a stable income in retirement, helping you cover costs like health care and housing. You can also get help if you become disabled or lose a loved one who worked.
Applying is easy—just follow the steps on the Social Security website.
This program lifts millions out of poverty and dramatically helps women, especially those in their 60s and 90s. Social Security is here to support you through different stages of life and give you peace of mind about your future!
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